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Fading of the Dollar's Dominance
Other Nations See Opening to Boost Their Currencies
http://www.washingtonpost.com/wp-dyn/content/article/AR2009062303397_pf.html
By Anthony Faiola | Washington Post Staff Writer | Wednesday, June 24, 2009

The days of calling the dollar almighty may be numbered.

Since World War II, when the dollar eclipsed the British pound as the king of world currencies, the United States has reaped the rewards of its monetary strength. The greenback's sense of indestructibility allowed the U.S. government to borrow cheaply and gave rise to an era of rich American globetrotters toting the world's most easily convertible form of cash.

But the financial crisis that started in the United States is dramatically intensifying the debate over the future of the dollar, and whether it can, or should, remain at the top of the financial food chain. Although a meaningful shift away from the dollar is likely to take years or more, some analysts believe that the debate is now reaching a tipping point.

Last week, the leaders of Brazil, Russia, India and China -- whose governments are some of the world's largest dollar holders -- jointly declared the need for a "more diversified international monetary system," sparking a drop in the greenback on world markets. In recent months, China in particular has led a campaign for a new world monetary order, arguing that the financial crisis has exposed profound vulnerabilities in the U.S. economy and financial system. Those flaws, critics argue, show it is simply too risky for the world's central banks to rely largely on the dollar for their global reserves.

At the same time, Beijing has taken unprecedented steps to increase the international role of its own currency, the yuan, to a level commensurate with China's relatively new status as a major economic power. In the coming weeks, the International Monetary Fund -- the institution charged with the monitoring and stability of the global economy -- will issue a vast amount of currency-like assets known as Special Drawing Rights, which some analysts see as a long-term substitute for the hordes of dollar reserves being held by central banks around the world. Some now envision that the dollar will fall from its recent levels of 60 to 65 percent of international reserves to less than 50 percent a decade from now.

A diminishing of the dollar's global role has far-reaching implications for the United States. The value of the dollar versus other major currencies could markedly drop as it slips from supremacy, making millions of Americans overseas feel poorer while potentially fueling a new golden era for U.S. exporters as American goods become more cost-competitive. The U.S. government may also be forced to pay higher rates to investors when selling, for instance, Treasury bonds to raise cash -- making it far more costly in the future to cover the kind of massive stimulus spending the government is now undertaking.

"The dollar's global status has allowed the U.S. to have a free pass on financing our deficit as opposed to countries like Brazil, who are punished by international currency investors for risky behavior," said Martin Weiss, author of the "Ultimate Depression Survival Guide." "But if the dollar is no longer the currency everybody wants or must have to continue doing business, that is going to be much, much harder to do."

Despite the current campaign to lessen the dollar's role, analysts note that there has not yet been a major push by foreign governments or private investors to shed it. In fact, over the course of the financial crisis, the dollar -- which had been on a downward trajectory for months -- has actually strengthened against major currencies, including its closest rival, the euro. That is partly because even nations like China -- with the world's largest dollar-denominated reserves, at close to $2 trillion worth -- have shied away from dumping the dollar, fearing it could trigger a global run that would severely damage the value of their holdings. Additionally, other mighty currencies like the euro have lost their chance to claim the dollar's crown because their issuing nations are in even worse economic shape than the United States. In times of crisis, the dollar, as well as dollar-denominated U.S. Treasury bonds, are still seen as safe havens.

"The U.S. had to screw something up to lose the dominance of the dollar, and you could argue that the U.S. starting a global financial crisis is a pretty big screw-up," said C. Fred Bergsten, director of the Peterson Institute of International Economics and a top economic official during the Carter administration. "But the Europeans haven't been able to take advantage of that to advance the euro immediately, largely because they've made some pretty big screw-ups themselves."

That said, economists including Bergsten are now saying the end of the dollar's dominance appears increasingly inevitable. During the 19th and early 20th centuries, for instance, the British pound enjoyed a similar supremacy. It gradually lost that role as Britain's empire crumbled, was devastated by two world wars and saw the United States emerge as the world's dominant superpower. By the same token, economists see the current financial crisis, and the doubts it has raised about the U.S. economy, as accelerating the creation of a new economic order. The easy monetary policy embraced by the Federal Reserve to spark a recovery -- including zero-interest rates and the printing of cash to support stimulus spending -- is also working against the strength of the dollar.

"The dollar may very well see periods of strength in the weeks and months ahead," said Douglas Rediker, director of the Global Strategic Finance Initiative at the New America Foundation. "But in the long run, I think it is clear that it will lose some of its hegemonic status." This has left room for rising nations such as China to seize a broader role in the global monetary system. Though the Chinese currency remains largely non-convertible -- meaning it cannot easily be used in international transactions -- Beijing has taken steps to sign currency exchange agreements worth $95 billion with South Korea, Malaysia, Indonesia, Belarus, Hong Kong and Argentina. Brazil and China announced in May that they are exploring a similar agreement. Though it may take years before such agreements have any real impact on the dollar, they are coming at a time when governments around the world may find another potential substitute for their dollar reserves: the IMF's Special Drawing Rights.

The SDRs are a currency-like asset whose value is based on the dollar, the pound, the euro and the yen. They have been issued by the IMF, albeit in highly limited form, since the 1960s to aid nations in need of reserves. In April, however, world leaders including President Obama agreed at an economic summit in London that SDRs should now be used to help stabilize the balance sheets of nations struggling to combat the current crisis. As a result, the IMF is now set to "print" $300 billion worth of SDRs -- 10 times more than currently exist -- for distribution to nations around the globe. They will effectively be held as reserve deposits by each nation's central bank. Some, like Bergsten, have argued the SDRs' role should be taken a step further, allowing them to serve as a de facto global reserve currency. Bergsten has advocated, for instance, the idea of nations such as China "trading in" their dollars for SDRs, allowing for an orderly transition away from the greenback without causing a sharp fluctuation in the dollar's market value.

"Like it or not, the dollar is going to lose some of its global status," Bergsten said. "So maybe it's time we just accepted that and figured out the best and most orderly way to make that happen."

Learnings from the Peoples’ Tribunal: Common Property, Communidades, Temples and Churches
http://www.dervishnotes.blogspot.com/
(Published in the Gomantak Times 17th June 2009)

A critique leveled against this column last week, when it entered into the debate on the ‘Political Economy of the Church’ was that it ignored the issue of the lands and properties controlled by the temple committees in the State. It was pointed out, that the temple committee’s in the State are like the Church, also custodians of vast properties, that are effectively held privately, under the ridiculous proposition that they are private temples, and hence in that sense family properties.

To respond to this issue, we need to address a fundamental myth about communal institutions in Goa, be they the Communidades or the Temple Trusts in the State. Since perspective, or the position from which we understand the issue, is also important, let us adopt the perspective of those who are edged out of the whole equation, be it Communidade or Temple; the tribal communities of Goa.

In the course of the recently held Peoples’ Tribunal for the Restoration of Tribal Homelands, the institution of the Communidade emerged as a major location of conflict with regard to the livelihood rights of the tribal groups of Goa. In a large number of cases before the tribunal, it turned out that despite have Portuguese-era documents that attested to their rights in the land, the names of tribals in possession of, and husbanding properties, were not present in the Survey Records dating from the 1960s (that is under the Indian dispensation). In some cases, illiteracy has resulted in some people having no documents at all to prove their presence on the land. The result is that they are by and large unable to avail of any government service related to the land, since they have to get a No Objection Certificate (NOC) from the Communidade office. The Communidade in most places (both New Conquests and Old Conquests, and the majority of the stories came from the New Conquests) is run by dominant caste groups, who either dissuade them from pursuing the matter, or tell them to buzz off. In any case, the Communidade officials do not cooperate with the tribals to establish the fact that they have in fact been tenants of the Communidade, and are thus entitled to the rights that come with such a fact. As a result, when these Communidade lands are sold by the Communidade or acquired by the State, the tribal communities who are either wholly or substantially dependent on land have no stake in the process or benefit from the sale.

The case of temple properties is somewhat similar. The temples are claimed as family temples by a handful of upper-caste groups and vast properties cornered by these groups, while the tribals, to whom the deity originally belonged and who tend the properties of the temple, are reduced to persons who are merely tolerated. Once more rights are denied in pretty much the same way as in the case of the Communidades.

How did this situation come to be? The situation it should be noted is universal. In almost every society that makes a transition – through colonialism – to a capitalist society with written rules, the less resourceful groups get pushed out. They get pushed out because the colonizer does not speak with them to ascertain their rights in the whole process. It is the dominant group that represents the working of the social system and the rights of various groups. In this process, they either out rightly exclude marginal groups, or underplay the rights that they had in the working of the system.

In Goa thus far we have been treated to the myth that the communidades are composed of gaocars who are members of the ‘founding families’ of the village. This story should hold as much water in today’s world as the idea of ‘old families’. All families are as old as the other, what we mean when we say ‘old family’ is that the family has been powerful for a long time. Similarly ‘founding families’ are those clans/ caste groups who were dominant in the village at the time. The rest of the village groups, were subservient to these dominant groups, but definitely not without traditional rights. It was these rights that got excluded at the time of the framing of the Foral of Afonso Mexia in the early 1500’s and formed the basis of the Communidade system.

Much later in time, the Portuguese realised the need to regulate the Temples and formulated the Lei de Mazanias. Once more, upper caste groups were able to take control of the process and through relying on the already established myth of ‘founding families’, and the fact that they were literate and able to manipulate records, argue that the temples (and their properties) were family temples.

The release from Portuguese rule should have ideally led to a release from the mistakes of the Portuguese (feudal) past into the socialistic future we were promised. However this was not to be. As mentioned above, the Survey of the 1960’s has in fact made life even more difficult for Goa’s tribal groups, since their Portuguese era land documents, held valid under the Portuguese are no longer recognized by judicial authorities. Even worse, the possibly liberative recognition by the Portuguese State embodied in the Code of the Communidades, that the village lands were not owned by the State, but were the property of the village, was not recognized by the Indian State. Liberation from the point of view of the Goan tribal then, has yet to come.

What is the solution to this problem? Tribal activists argue that the answer lies in the recognition of their right of private property over the lands that they were tenants to, or rely on. My personal position stems from a recognition of the situation that in fact existed prior to the Portuguese arrival, a system that was de facto in place over large parts of Goa, until the capitalist expansion began hardly 3 decades ago. There can be no private ownership of land. Land does not exist to be owned. Land is the property of the village in which every member of the village (gaocar or not) has an equal right to benefit from. Land unused by a family, returns to the village pool, to be re-allotted elsewhere. This is not a utopian system, it exists in the North-east protected under the very same Special Status provisions of the Indian Constitution that are desired by some for Goa.

This argument is NOT an argument against private property. It is an argument in favour of a tendency toward equal access to land, and against the notion of ownership of land, while respecting the right to occupy land. It is also an argument that privileges democratic control over resources (like land) that are already seen as common property.

To return to the issue of the Church and property, we must recognize that the contemporary Church has taken some steps toward democratizing the operation of local Churches, and access to its resources. Caste based confraternities and fabricas have been done away with, at least on paper, and the operation of the local Church opened up to all caste groups. What is required now is to push for these on-paper-reforms to be equitably enforced (without animosity to formerly dominant caste-groups). This is an example that Goan temples riven with inter-caste disputes would do well to adopt.

Under this circumstance, it does not appear as if greater governmental control will resolve anything. What is required is for either effecting changes in governance structure to make the institution more representative of village communities. And subsequently ensure that these institutional changes don’t remain on paper. This task requires a social movement not governmental control. If anything, we know that putting our faith in the government will result in more sale of common property for dubious ‘public purpose’ schemes.

(Published in the Gomantak Times 17th June 2009)

Sony Comments on the Passing of Michael Jackson
http://www.newswire.ca/en/releases/archive/June2009/26/c2257.html?view=print

NEW YORK, June 26 /CNW/ -- Michael Jackson, one of the most widely beloved entertainers and profoundly influential artists of all-time, leaves an indelible imprint on popular music and culture.

Commenting on his passing, Sir Howard Stringer, Chairman, CEO and President, Sony Corporation, said: "Michael Jackson was a brilliant troubadour for his generation, a genius whose music reflected the passion and creativity of an era. His artistry and magnetism changed the music landscape forever. We have been profoundly affected by his originality, creativity and amazing body of work. The entire Sony family extends our deepest condolences to his family and to the millions of fans around the world who loved him."

Rolf Schmidt-Holtz, CEO, Sony Music Entertainment, said: "Michael Jackson's unsurpassed artistry and beloved music brought joy to every corner of the world. We join today with his millions of fans in expressing our profound sadness and we offer our deepest condolences to his family and loved ones. It was a true privilege for all of us in the Sony Music family to work with one of the most talented superstars in the history of music. We will miss him greatly."

Martin Bandier, Chairman & CEO of Sony/ATV Music Publishing, said: "Michael was the kind of amazing talent that comes along once in a lifetime. He was an incredible recording artist, an insightful businessman, an unmatched performer, and a true icon. To all of us at Sony/ATV Music Publishing, he was also a trusted and passionate partner, who was very proud of our accomplishments. He will be dearly missed. We wish his children and entire family our deepest condolences."

Five of Jackson's solo albums - "Off the Wall," "Thriller," "Bad," "Dangerous" and "History," all with Epic Records, a Sony Music label - are among the top-sellers of all time. During his extraordinary career, he sold an estimated 750 million records worldwide, released 13 No. 1 singles and became one of a handful of artists to be inducted twice into the Rock and Roll Hall of Fame. The Guinness Book of World Records recognized Jackson as the Most Successful Entertainer of All Time and "Thriller" as the Biggest Selling Album of All Time. Jackson won 13 Grammy Awards and received the American Music Award's Artist of the Century Award.

Michael Jackson started in the music business at the age of 11 with his brothers as a member of the Jackson 5. In the early 1980s, he defined the art form of music video with such ground-breaking videos as "Billie Jean," "Beat It" and the epic "Thriller." Jackson's sound, style and dance moves inspired subsequent generations of pop, soul, R&B and hip-hop artists.